France and Germany proposed Monday a 500 billion euro (S$774 billion) fund to finance the recovery of the European Union’s economy from the devastation wrought by the coronavirus crisis, reports The Straits Times.
Putting aside past differences and seeking to prove that the Franco-German core of Europe remains intact, President Emmanuel Macron and Chancellor Angela Merkel announced the unprecedented package after talks by video conference.
With the European economy facing its biggest challenge since World War II, Macron also acknowledged that the EU had fallen short in its initial response to the virus and needed to coordinate more closely on health.
Financed by “borrowing from the market in the name of the EU,” the money will flow to the “worst-hit sectors and regions” in the 27-member bloc, the two countries said in a joint statement.
“We are convinced that it is not only fair but also necessary to now make available the funds... that we will then gradually repay through several future European budgets,” Merkel said.
Countries benefiting from the financing would not have to repay the money, Macron added, emphasising that the funds “were not loans.”
The borrowing marks a major shift by Germany, which has until now rebuffed calls by Spain and Italy for so-called “coronabonds” for joint borrowing on financial markets to provide stimulus cash.